ESRS S2 – Workers in the Value Chain

Material Impacts, Risks and Opportunities

As part of our materiality assessment, we identified the following negative impacts on workers in our upstream value chain.

In view of our global procurement of materials and services, the following groups of workers in particular may be subject to material impacts:

• Workers of subcontractors who perform activities at Beiersdorf production sites without being directly employed by Beiersdorf;

• Workers of direct business partners in manufacturing industries (such as the packaging industry) or in service industries;

• Workers engaged in labor-intensive service activities such as value added services (VAS), i.e., services which go beyond mere product delivery and enhance brand presence;

• Workers in the upstream supply chain involved in raw material extraction, such as the palm oil or natural rubber industries.

The negative impacts we identified on workers in the value chain may be either systemic or isolated incidents, such as in countries with weak or lacking human rights standards, or due to misconduct by individual business partners. We identify business-specific risks annually in a risk analysis based on international indices and information sources. We also perform risk profiling of business partners relevant to procurement, using external software such as “EcoVadis IQ” and adding our own procurement data. This enables prioritization and targeted planning of actions.

Moreover, the Consumer Business Segment identified critical product groups that require special attention through a risk assessment for the procurement categories of our renewable materials.

Policies Related to Workers in the Value Chain

We define responsible sourcing as a supply chain in which laws are adhered to, human rights are respected, natural ecosystems are protected, climate effects are mitigated, and positive developments are promoted in the countries of origin of our materials and services. Fair working conditions and respect for human rights have a particularly high priority.

We aim to put this plan into action using our company policies. These policies are based on applicable legislation and international standards such as the UN’s “Universal Declaration of Human Rights,” the conventions of the International Labour Organization (ILO), the “Guidelines for Multinational Enterprises” of the Organisation for Economic Co-operation and Development (OECD), the Ten Principles of the UN Global Compact (UNGC), and the UN’s “2030 Agenda for Sustainable Development.” We also comply with country-specific regulations and official governmental requirements.

Processes for Engaging with Workers in the Value Chain

Beiersdorf aligns its measures to protect workers in the value chain with civil society organizations. In this way, we aim to consider the interests of affected workers in our due diligence processes as effectively as possible. Examples of stakeholder engagement include the following:

• We work closely with direct business partners – including Evonik – and with NGOs such as the WWF in our field projects in the palm oil, shea butter, and coconut oil supply chains of the Consumer Business Segment. These partnerships ensure that the actions are aligned with the local situation and needs of the workers, particularly vulnerable groups.

• The Consumer Business Segment has been working with “responsible sourcing” consultants since 2020, in order to include the perspective of particularly vulnerable groups in our risk analysis and prioritize critical procurement categories of our renewable materials.

• Thanks to the training offered by the Consumer Business Segment to smaller business partners with limited resources, we are in a position to understand their specific challenges and their workers, and offer targeted support.

• As a member of the UNGC, we are part of a network of government bodies, research institutions, and civil society organizations that supports the private sector in operating responsibly and upholding human rights. The perspectives of workers are represented by civil society UNGC organizations.

• The standardized “Sedex Members Ethical Trade Audit” (SMETA) involves surveying employees of business partners and their subcontractors to ensure that they are aware of labor rights, that freedom of assembly is safeguarded, and that violations can be reported safely. Irregularities are followed up with agreed corrective measures.

Channels for Workers in the Value Chain to Raise Concerns

Beiersdorf offers various channels for both internal and external individuals to report compliance violations, including human rights abuses. These include the “Speak up. We care.” (Consumer) and “Your voice. Our bond.” (tesa) whistleblowing systems (see chapter “ESRS G1 – Business Conduct”). Employees and workers in the value chain can report violations via these systems with protection, security, and – where legally permissible – anonymity. The reports are processed by the Human Rights Officer and the Head of Sustainability Strategy & Reporting in the Consumer Business Segment, and by the Compliance Manager Legal Affairs and the Head of Sustainable Procurement in the tesa Business Segment.

In the reporting year, the following report relating to human rights of workers in the value chain was submitted to one of our business partners via the “Speak up. We care.” whistleblowing system. The allegation concerned excessive working hours beyond legal limits and remuneration below the statutory requirements. The allegation was investigated and audited both internally and externally. The investigation did not substantiate the allegation. In the tesa Business Segment, no reports were submitted via the “Your voice. Our bond.” whistleblowing system.

The Consumer Business Segment additionally provides an email address for reporting concerns: incidents_cases@beiersdorf.com. Both this email address and the whistleblowing platform are communicated along the value chain through the CoCB/CoCS. Business partners are required to confirm by signing the CoCB/CoCS, that they communicate the offered reporting channels within their own organizations or provide their own reporting channels. Moreover, free training offered to business partners emphasizes the importance of whistleblowing mechanisms for workers in the value chain.

Finally, for complex risk supply chains, such as those involving palm oil in the Consumer Business Segment, we work closely with direct raw material suppliers and other stakeholders. Through multi-stakeholder initiatives like the “Roundtable on Sustainable Palm Oil” (RSPO) and the “Action for Sustainable Derivatives” (ASD) (see chapter “ESRS S3 – Affected Communities”), we collectively investigate reported concerns, verify their validity, and collaboratively establish appropriate measures. No effectiveness check is carried out for the remedial actions taken.

In line with the company-wide “Source Responsibly” sustainability target, tesa has developed a multi-step transparency process to supplement the “EcoVadis IQ” risk profiling. This process enables systematic coverage and assessment of the entire supply chain, most importantly for bio-based materials and high-risk suppliers identified through the “EcoVadis IQ” assessment. The aim of this multi-step process is to ensure that all companies involved in the tesa supply chain comply with our requirements. If this process identifies a risk in the supply chain, tesa defines appropriate mitigating actions.

Actions Related to Workers in the Value Chain

Beiersdorf has various processes and actions in place to prevent negative impacts on workers in the value chain. The CoCB (Consumer), CoCS (tesa), and “EcoVadis IQ” risk profiling form the basis for these actions. There are additional actions in the Consumer and tesa Business Segments that promote responsible supplier management in their own business areas and thereby aim to prevent negative impacts from our indirect business partners.

The described measures require close cross-functional coordination, where responsibilities are distributed but the content is largely developed collaboratively. If a business partner repeatedly exhibits non-compliance, fails to cooperate on corrective actions, or is involved in severe violations such as child or forced labor, the business relationship may be questioned and, if necessary, terminated. Best practices from industry associations such as “AIM-Progress” are integrated into these efforts. This initiative unites the Consumer Business Segment with over 40 leading manufacturers in the “fast-moving consumer goods” industry to collaboratively advance procurement in line with social sustainability criteria across the sector. Direct dialogue with companies of comparable size or position also plays an important role in assessing whether our measures are appropriate and effective.

Actions Beyond Direct Business Partners

Review and Development of Actions in Both Business Segments

Corporate decisions, such as on mergers and acquisitions or on restructuring the product portfolio, may have an impact on workers in the supply chain. Beiersdorf is aware of this field of tension and addresses it in the design of the described actions. In this context in particular, but also more broadly, it is important for both business segments to regularly review their activities.

Overall, we assess our actions relating to workers in the supply chain as effective. There was a potential incident of non-compliance with human rights in the Consumer Business Segment during the reporting year. We investigated it after becoming aware of it through our risk screening. However, we ruled out any connection to our value chain.

No incidents were reported in the tesa Business Segment in the reporting year. Beiersdorf provides appropriate means and resources to deal with identified incidents with the highest priority. This includes responsible functions and employees attending external webinars and other training opportunities. Additional financial resources were provided in the reporting year to automate our due diligence processes.

Management further underscores the importance of these topics through regular updates and communication with the Executive Board and oversight committees.

Targets Related to Workers in the Value Chain

Beiersdorf has established targets aimed at preventing potential negative impacts on workers in the value chain. They underpin the implementation of our policies such as the CoCB (Consumer), CoCS (tesa), and our policy statements. The perspectives of workers in the value chain or their legitimate representatives were not included in our target setting.

We record relevant metrics on an ongoing basis to monitor progress. We present them at global level monthly to the Vice President Procurement and the Vice President Sustainability (Consumer), and on an ongoing basis to the Head of Corporate Sustainability and the Vice President Global Procurement (tesa). In addition, relevant members of the Executive Board are informed quarterly. The data basis is derived from internal master data and contract management systems, and from the external “EcoVadis” IQ platform.

The targets of the Consumer and tesa Business Segments were consolidated at Group level in the reporting year; they continue to apply.